Published on STWR (Share the world resources), by Adam W. Parsons, Sept. 16, 2008.
… A crisis of faith in markets There are signs, however, that the world direction is changing course. As a knee-jerk response to skyrocketing food price inflation, those developing governments fortunate enough to have export stocks began pulling out of the global market to safeguard their domestic prices. The failure of the Doha Round of trade negotiations, which sought to further liberalise agricultural markets, was widely interpreted as recalcitrance on the part of developing countries – and the issue of agriculture, in the light of the food crisis, was cited by most accounts to have provoked the collapse.
Confidence in the IMF’s and World Bank’s promises for a food utopia through liberalised markets is being shattered in the midst of a bidding war against speculators and traders. With the amount of speculative money in commodities futures increasing from US$5 billion in 2000 to US$175 billion in 2007, those who profit from the human disaster of food insecurity has become incontestably clear. For the small clique of corporations that control the world’s grain markets, profits soared by as much as 447 percent between 2007 and 2008. Following the amoral logic of unrestrained market forces, hunger and famine is an assurance for hedge fund managers speculating in grain markets that food prices will keep on rising.
The only source of good to emerge from spiralling food price inflation is the resultant crisis of faith amongst poorer and developing countries in neoliberal economic orthodoxy. Unlike the crisis of 1970s stagflation that signalled the end for the Keynesian social-democratic model, 2008 could be marked down in
history for setting in motion an opposite trend. A notable example of this gradual shift in economic thinking is set down in the UN’s latest World Economic and Social Survey (WESS), released a week before the G8 Summit. A belief in the self-regulating market is no longer credible, was the Report’s message, noting that “John Maynard Keynes, until recently persona non grata in policy circles, is once again the ‘defunct economist’ to consult.”
What the world situation demands is a return to the “social contract” as once discussed by 17th century philosophers, says the Report, which requires appropriate government intervention to protect citizens against the severe economic swings and inequalities that have proven an unavoidable by-product of globalisation. Rolling back the welfare state in obeisance to the market mechanism hasn’t worked, it says, and economic growth is a “necessary but not a sufficient condition for tackling poverty.” What we need, it concluded, is a renewal of the Bretton Woods system’s originating purpose, a revisiting of the Marshall Plan principles, and a re-enactment of the New Deal on a global level.
Such an acknowledgement of the redistribution agenda is no longer confined to renegade economists exempt from mainstream discussion. The WESS Report may not go far enough in its call to merely “unleash, govern and civilise” markets, but there is no shortage of alternative thinking on how to transform a runaway market-led economy. An immediate source of inspiration is found in the widespread proposals for food sovereignty: to remove basic foodstuffs from international markets, to focus on productive, sustainable agriculture under the control of small farmers and local markets. Although the food price crisis has failed to serve as a wake-up call to world leaders, a crucial international debate has started to emerge on the whole theology of food security.
For now, the redundant model of export-led agriculture and import dependency has won through, but the calls for people-led social change are rapidly achieving a long-awaited consensus. (full text).
(Adam W. Parsons is the editor of Share the World’s Resources. He can be reached by mail).